Why fund managers see Reliance Worldwide's sell-off as overdone

US tariff fears and soft housing activity hit Reliance Worldwide hard, but a buy-back and manufacturing cost cuts have helped the stock recover.

30 Jun 2026 · 6 min read

Plumbing products maker Reliance Worldwide Corporation has weathered a difficult stretch of US tariff uncertainty and soft housing activity, with fund managers increasingly viewing the resulting share price weakness as an overreaction. Perpetual Asset Management's March 2026 Monthly Report detailed the stock falling 21% over the quarter, including a 9% single-day fall after management flagged a potential shift from copper-based brass to stainless steel in certain plumbing fittings, a move the market read as a margin and capital expenditure risk despite being driven by regulatory compliance and raw material volatility management.

A repair-focused business built for a soft cycle

Perpetual's report set out why it kept holding through the weakness: the company owns leading brands, proprietary technology and an established retail and trade distribution footprint, particularly in the US, and maintains a comfortable balance sheet supporting capital returns including a newly announced share buy-back. Equity Trustees Asset Management's September 2025 Quarterly Report had earlier framed the defensive appeal of the business model directly, noting Reliance's products are principally used in the less cyclical residential repair and renovation market rather than new home construction, which remains very weak in the US, with the earnings downgrade cycle close to an end and the business leveraged to a lower interest rate cycle from FY27.

Reliance remains an extremely well run cyclical at the bottom of the cycle with a healthy balance sheet and with outsized upside should the cycle turn.

— Perpetual Asset Management, Monthly Report, August 2025

Pendal Group's March 2026 Newsletter detailed the market's reaction to a US$120 million share buy-back, equivalent to around 5% of shares on issue, announced amid concerns about US tariffs and the potential impact of the Iran conflict on US residential construction demand, with the stock rising sharply as the market read the buy-back as a reassuring signal on the company's outlook. Ten Cap's April 2026 Article quoted portfolio manager Liu describing the situation as a classic case of the market overpricing downside risk, with an expected earnings downgrade already reflected in the depressed share price.

What managers are watching next

Wilson Asset Management's June 2026 Monthly Report detailed a further cost-cutting initiative, the planned closure of brass casting, forging and machining operations at two Melbourne sites, expected to deliver a net annual EBITDA benefit of approximately US$9 million across the group by the end of FY2027. Perennial Partners' own June 2026 report tied the stock's subsequent 23.7% rally to optimism that an end to the Middle East conflict could ease inflation and, with it, bring forward the interest rate cuts needed to meaningfully stimulate US housing activity, with the current 30-year fixed mortgage rate of around 6.5% generally thought to need to fall below 6.0% to do so.